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Bristol-Myers Squibb Fall From Favor Could Profit Patient Investors

NEW YORK (TheStreet) -- Bristol-Myers Squibb (BMY - Get Report) began 2014 with fanfare and market acclaim. After announcing the sale of its global diabetes business to AstraZeneca (AZN) for more than $4 billion, shares of BMY rocketed above $57 on March 5 shortly after the deal was completed.

Since then it's been downhill for the company's stock. By June 9 shares plunged nearly 18.5% to $46.51. Some talking heads were calling the stock "dead money" and described Bristol-Myers as a company that had sold its way into obscurity and uncertainty. Its shares closed Monday at $47.27, down nearly 12% for the year to date.

Little wonder technical chartist Helene Meisler, the editor of The Daily Swing Trade, wondered how the stock went "from so good to so bad so quickly and no one even mentions it. The fundamentalists were all over it, loving on it, and here it is down on the year."

She concluded, "In a market that doesn't get saved all the time, [its] chart measures to $40. In this market I would pay attention to the $48-$49 area. If it cannot recapture that level, then it tells us something is wrong here." So far that observation has proved accurate.

But that doesn't mean patient investors with a long time horizon can't consider BMY.

The perception that "...something is wrong here" may be based on several factors. Investors have been concerned about the company's drug pipeline and analysts have questioned its short-term ability to grow its revenue number and bottom-line earnings.

The company has been going through a purposeful transition for several years. Much of the downsizing was accomplished by selling its non-pharma assets including a wound care company, a medical imaging unit and the spinoff of what is today called Mead-Johnson Nutrition (MJN), Bristol's lucrative infant nutrition company.

The metamorphosis was so dramatic that one industry analyst described it as the most stunning witnessed in the drug sector. Jami Rubin with Goldman Sachs described Bristol's overhaul as taking the company "from a big, diversified drug company to a highly focused biopharma firm."

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